Title: Marketing Channel Systems
1Part 1
- Marketing Channel Systems
2Primer on The Basics
3Primer on The Basics
- Marketing is an organizational function and a set
of processes for creating, communicating, and
delivering value to customers and for managing
customer relationships in ways that benefit the
organization and its stakeholders. (Lusch and
Marshall 2004) - Competition for a Differential Advantage
(Alderson 1957)
4Primer on The Basics
- What is the Marketing Concept?
- A management philosophy which advocates that a
business organization (or channel)
5Primer on The Basics
- What is the Marketing Concept?
- A management philosophy which advocates that a
business organization (or channel) - Exists to identify and satisfy the needs of its
customers (i.e., customer orientation) - That a customer orientation is accomplished
through an integrative effort throughout the firm
or channel (i.e., integrated effort) - That the firms (or channels) focus should be
long-term and seek to provide a satisfactory
return on owners investment (ROI) (i.e.,
long-term profit orientation)
6Primer on The Basics
- What are the Eight (8) General Marketing
Functions?
7Primer on The Basics
- What are the Eight (8) General Marketing
Functions?
- Buying
- Selling
- Storing
- Transporting
- Sorting
- Financing
- Information Gathering
- Risk Taking
8Primer on The Basics
- What Purpose do
- Marketing Channels Perform?
9Primer on The Basics
- What Purpose do
- Marketing Channels Perform?
- Make products and services conveniently available
to customers when, where, and how they want them
in order to satisfy demand. - The farmer, egg, grocery store example.
10Chapter 1
- Marketing Channel Concepts
11Why the growing importance of marketing channels?
Objective 1
1
1. The explosion of information
technology and E-commerce 2. A greater
difficulty in gaining a sustainable competitive
advantage 3. The growing power of
distributors, especially retailers in marketing
channels 4. The need to reduce distribution
costs
12 The explosion of information technology
and E-commerce
1. 2. A greater difficulty in gaining a
sustainable competitive advantage 3. The
growing power of distributors, especially
retailers in marketing channels 4. The need
to reduce distribution costs
1
The prediction Disintermediation reduction of
number of intermediaries
Yahoo!
eBay Amazon.com
The reality
Reintermediationevolution of a new type of
intermediary
E-commerce is more an evolution than a revolution
in marketing.
13 The explosion of information technology
and E-commerce
1. 2. A greater difficulty in gaining a
sustainable competitive advantage 3. The
growing power of distributors, especially
retailers in marketing channels 4. The need
to reduce distribution costs
1
14 A greater difficulty in gaining a sustainable
competitive advantage
1
1. The explosion of information technology
and E- commerce 2. 3. The growing
power of distributors, especially retailers in
marketing channels 4. The need to
reduce distribution costs
Place (distribution), or Marketing Channel
Strategy
Sustainable competitive advantage
Potential for gaining competitive advantage
because place is more difficult for
competitors to copy
15 The growing power of
distributors
1
1. The explosion of information technology
and E-commerce 2. A greater difficulty in
gaining a sustainable competitive advantage 3.
4. The need to reduce distribution costs
Power retailers as gatekeepers of consumer markets
Act as buying agents for customers rather than
as selling agents for manufacturers
16The need to reduce distribution costs
1
1. The explosion of information technology
and E-commerce 2. A greater difficulty in
gaining a sustainable competitive advantage 3.
The growing power of distributors 4.
Marketing channels are the most recent target for
reducing distribution costs.
The focus is on channel structure and management.
17What is a marketing channel?
Objective 2
1
Outside the firm
Firm involved in negotiatory functions
Managements involvement in the process
- External contactual organization that management
operates to achieve its distribution objectives
Goals that change, causing variations in
contactual organizations involved
18What is a channel manager?
1
- Anyone in a firm or organization who is involved
in marketing channel decision making
19How does marketing channel strategy relate to the
rest of the marketing mix?
Objective 3
1
Marketing Mix or the four Ps Challenges
Product Limited ability to gain and hold competitive advantage
Price Price wars erode profitability provide unstable basis for sustaining competitive advantage
Promotion Expensive and short-lived
Place (Distribution) Marketing channels support enhance other Ps to meet demands of target markets
20The change of focus to channel strategy
1
- Creates competitive advantage with long-term
viability - Builds strong relationships between manufacturers
and channel members - Based on trust, confidence,
- and people power
21 Channel Strategy and Logistics Management
1
Parts of the Place or Distribution Variable
Concerned with entire process of starting and
operating contactual organization Formulated
before logistics management
Focused specifically on providing product
availability at appropriate time place
225 Primary Marketing Channel Flows
1
Objective 4
Product Flow
Negotiation Flow
Ownership Flow
Information Flow
Promotion Flow
23Product Flow
1
Manufacturer
Transportation Company
Wholesalers
Retailers
Consumers
24Negotiation Flow
1
Manufacturer
Wholesalers
Retailers
Consumers
25Ownership Flow
1
Manufacturer
Wholesalers
Retailers
Consumers
26Information Flow
1
Manufacturer
Transportation Company
Wholesalers
Retailers
Consumers
27Promotion Flow
1
Manufacturer
Advertising Agency
Wholesalers
Retailers
Consumers
28Distribution through intermediaries
Objective 5
1
Factors that determine the role of intermediaries
Technology the Internet Economic
Specialization Considerations
Division of Labor
Contactual Efficiency
29Channel Structure v. Ancillary Structure
Objective 6
1
Channel Structure The group of channel members
to which a set of distribution tasks has been
allocated
Why are single-channel structures currently the
exception?
Ancillary Structure The group of institutions
that assist channel members in performing
distribution tasks
Why is managing the ancillary structure most
likely to be less complex than managing the
channel structure?